It is every homebuyer’s goal to successfully get their dream property for a great deal. However, everyone knows as well that this is a lot trickier than it seems.
The home buying process can be arduous and be filled with negotiations. It can be extremely emotional as well. On top of that, you’re dealing with making the commitment of making one of your life’s biggest investments.
All of these can eventually lead you to have buyer’s remorse. The minute your offer gets accepted and you sign the contract, you’ll start doubting the decision that you just made. You will start second-guessing if your offer was too high and if the property is worth the money you’re paying for.
The best way to avoid experiencing buyer’s remorse is through research and preparation. Here is a list of tips you can use to help you determine if the property you’re eyeing is a great deal.
#1 Define what a “great deal” means to you.
Every great victory starts with a great plan. In order to strategically score the dream of your home for a great deal, you have to first define what a great deal means to you.
Is it being able to get a home for 20% less its current market value? Is it finding a home in a specific neighborhood that is within your allocated budget? Could it be having the owner accept your initial offer? Or is it winning over the negotiations?
Real estate deals are always complicated and encompass a lot of different aspects. You are the only person who can precisely define what a great deal means to you as this will depend on what your personal goals and aspirations are in your life. Better than your real estate agent, you have to be decisive on what your priorities are.
#2 Look at comparable properties.
Comparable properties are the properties that are found in the same area or neighborhood with the same size, condition, and amenities.
This means that if you are looking for a 1,500 square-foot property with 5 bedrooms and a patio, then any property within the same area or neighborhood with the same lot size, number of rooms, and patio is a comparable property.
However, if you are unable to find a property that is comparable to what you are looking for, you can also do your research on the neighborhood. You can use the current market prices of other homes in the area to gauge the market value of your chosen property.
You can even try and visit other homes to see what the inside of their homes looks like. From there, you will have more information to determine if the property you’re looking at with its current condition and features is either overpriced or underpriced.
Additionally, you can always ask your real estate agent to help you with your research on comparable properties. Real estate agents can help you with their CMA report or their Comparative Market Analysis report.
#3 Check if the property is “for-sale-by-owner” (FSBO).
When you find a property that you are interested in, one of the first things that you should do is to check if the property is under FSBO.
When pricing a home, a seller’s agent’s commission is usually factored into the pricing of the property. Therefore, if a property is under for-sale-by-owner, then it should have a lower price in order to compensate for the fact that the owner will not have to pay any agent’s commission. The average commission of a seller’s agent is around 2.5% to 3%.
Another reason for checking this is that if a property is under FSBO, chances are, the owner was the one who decided on the price of their home. As homeowners, we can be easily attached to our home and assume that it is worth millions of dollars when it isn’t. This can lead to the property becoming overpriced.
#4 Ask yourself if you can afford it.
One of the easiest telltale signs of whether a property is a great deal or not is if it is within your allocated budget.
The reality is, you can keep on negotiating and throwing offers for a home and ultimately get it for a considerably lower price but if it outside of your budget, it will still not be a great deal. The last thing you’d want to do is to end up in your dream home only to have it taken away from you because you couldn’t pay off your mortgage.
The best way to stop this from happening is to be clear about your finances with your real estate agent. Be decisive about what your maximum budget is and allow your agent to find you the best deal that you can.
#5 Ask for your real estate agent’s opinion.
You hired your real estate agent for a reason and that is because they are experts.
It is highly likely that even without seeing the rest of the neighborhood property prices, your agent will already have a good estimate of the price of a property. Most real estate agents focus on certain areas and choose to become neighborhood experts which is why they should be familiar with all of the factors that play a role in determining the price of a property.
They are familiar with the market conditions as well. Utilize them and trust your real estate agent’s opinion.